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Scale Stability Diversified Growth. Investor Presentation Summer 2013. Wolfe Island, 198 MW. Forward-Looking Statements.

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Presentation Transcript
slide1

Scale

Stability

Diversified

Growth

Investor Presentation

Summer 2013

Wolfe Island, 198 MW

forward looking statements
Forward-Looking Statements

This presentation has been prepared by TransAlta Renewables Inc. (the “Company”) and the contents of this presentation are for information purposes only.  This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or other securities representing shares in the Company, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or investment decision.

Certain statements in this presentation about the Company’s current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward-looking statements.  The words “may”, “will”, “would”, “should”, “could”, “expects”, “plans”, “intends”, “trends”, “indications”, “anticipates”, “believes”, “estimates”, “predicts”, “likely” or “potential” or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements.  Forward-looking statements are based on estimates and assumptions made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate and reasonable in the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct.  Many factors could cause the Company’s actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors, which are discussed in greater detail in the final long form prospectus of the Company dated July 31, 2013 (the “Prospectus”) under the sections entitled "Forward-Looking Statements" and "Risk Factors" in the Prospectus: expectations and plans for future growth, including expansion into existing and new markets and other forms of power generation and acquisition activities, including acquisition activities involving TransAlta Corporation (“TransAlta”); the need for additional capital and the expected sources of, and access to, such capital; the availability of sufficient liquidity for future growth and payment of dividends to shareholders; possible changes in the regulatory regimes of the jurisdictions in which the Company operates or intends to operate; the Company’s expectations regarding the ability of TransAlta to operate the Company’s renewable assets effectively; expectations for the growth in demand for electricity in Canada and the U.S.; the possibility of the transfer of future assets held by TransAlta to the Company; the Company’s expectations regarding the availability of industry consolidation opportunities in the future; expectations in relation to the effect of government regulation, incentives and taxation regimes on the Company’s revenues, expenses and cash dividends; expectations in relation to the cost competitiveness of renewable power relative to other sources of power generation; expectations for the retirement of aging energy facilities and the development, construction or operation of new renewable energy facilities including TransAlta’s involvement in sourcing opportunities for the Company; the Company’s expected dividend policy and the amounts expected to be paid under that policy; and expectations regarding TransAlta’s continued ownership of Common Shares.  The purpose of the forward-looking statements is to provide the reader with a description of management’s expectations regarding the Company’s financial performance and may not be appropriate for other purposes; readers should not place undue reliance on forward-looking statements made herein. Furthermore, unless otherwise stated, the forward-looking statements contained in this presentation are made as of the date of this presentation, and the Company has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities regulations. The forward-looking statements contained in this presentation are expressly qualified by this cautionary statement.  

The Company has obtained the statistical data, market research and industry data presented in this presentation from a combination of government and other industry publications and reports and the estimates of management.  Such data involve risks and uncertainties and are subject to change based on various factors.  See “Notice to Investors - Market Data” in the Prospectus.  This presentation makes reference to certain non-IFRS measures, including Adjusted EBITDA and cash available for distribution.  These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies.  For more information relating to the non-IFRS measures, see “Notice to Investors - Non-IFRS Measures” and “Selected Historical Financial Information” in the Prospectus. Copies of the Prospectus are available on SEDAR at www.sedar.com.

one of the largest publicly traded renewable companies in canada
One of the Largest Publicly-Traded Renewable Companies in Canada

Wolfe Island, ON

Upper Mamquam, BC

  • 28
  • 1,112
  • $166
  • $86

Pingston, BC

New Richmond, QC

  • renewable power generation facilities
  • megawatts installedgenerating capacity
  • million in pro formaadjusted EBITDA
  • million estimatedannual dividend

Summerview 2, AB

Blue Trail, AB

  • High Quality Diversified Portfolio
  • 5 Operating Regions

Bone Creek, BC

Kent Hills, NB

  • Alberta
  • 4 hydro
  • 21 MW
  • 10 wind
  • 417 MW
  • British Columbia
  • 4 hydro
  • 77 MW
  • Ontario
  • 4 hydro
  • 7 MW
  • 3 wind
  • 398 MW

Bone Creek 19MW

  • Quebec
  • 1 wind
  • 68 MW

Upper Mamquam 25MW

Cowley North 20MW

Pingston 23MW

Summerview Two 66MW

New Richmond 68MW

Macleod Flats 3MW

Akolkolex 10MW

Blue Trail 66MW

Soderglen 35MW

Summerview One 70MW

Taylor Hydro 13MW

Sinnott 7MW

McBride Lake 38MW

Kent Hills One 80MW

Castle River 44MW

Kent Hills Two 45MW

Ardenville 69MW

Misema 3MW

Belly River 3MW

St. Mary 2MW

Waterton 3MW

  • New Brunswick
  • 2 wind
  • 125 MW

Moose Rapids 1MW

Appleton 1MW

Galetta 2MW

Wolfe Island 198MW

Melancthon One 68MW

Melancthon Two 132MW

premier renewable company
Premier Renewable Company
  • Scale and diversification underpinned by high quality assets
  • Low-risk portfolio consisting entirely of operating assets with fully contracted investment-grade counterparties
  • Multi-faceted growth strategy with potential access to >1,000 MW pipeline
  • Conservative payout ratio and financial leverage
  • Long-term alignment with TransAlta as sponsor and majority shareholder

Predictable, Stable Cash Flow SupportsAttractive Dividend Yield

Soderglen, 35 MW

4

canada s largest generator of wind power
Canada’s Largest Generator of Wind Power

Operating Wind Capacity in Canada (Net MW)

1,107

Source: CanWea June 2013 & company websites

Competitive Advantages of Unrivaled Scale

diversified asset platform across 5 operating regions
Diversified Asset Platform Across 5 Operating Regions

Estimated Net Annual Generation (GWh)

6%British Columbia

14%Hydro

10%New Brunswick

41%Alberta

10%Quebec

33%Ontario

86%Wind

Combination of Wind and Hydro Favours Stable Cash Flow

operational excellence
Operational Excellence

Proven technology from top wind equipment manufacturers

24/7 capability to operate remotely from centralized location

Performance and equipment monitoring from centralized operations diagnostic centre

Experienced operations and engineering team

High Wind Fleet Availability and Low Operating Costs

100 operating assets with established history
100% Operating Assets with Established History

Historical & Expected Production (GWh)

3,207

2,982

3,059GWh

Estimated NetAnnual Production1

5.8years

weighted average operating history

96.3%

2012 wind fleet availability

2012

2011

Adjusted for assets not yet reaching full production

Reported Production

Management estimates based on a near term base case production scenario, where there is an equal chance of higher or lower actual net annual generation, and are therefore subject to potential uncertainties.

Predictable Production with No Development Risk

100 contracted with investment grade off takers
100% Contracted with Investment-Grade Off-Takers

Government Backed Entities

  • Average Contract Life of 17 years

10%AAA

37%BBB–

33%AA–

4%BBB+

Sponsor

16%A+

Diversification Reduces Risk

slide11

Growth Strategy

Three Sisters, 3 MW

11

renewable power the fastest growing power segment
Renewable Power: The Fastest Growing Power Segment

Growth Focus:

  • Consolidate fragmented industry
  • Acquisitions of assets from TransAlta
  • Expansion into other markets and technologies

Le Nordais, 99 MW

Experience to Execute on Multi-Faceted Growth Strategy

12

sponsor with a proven track record in renewables
Sponsor with a Proven Track Record in Renewables

Proven Renewable Asset Growth (MW)

2,212

100years

176% increase

  • renewable operating experience

9,051MW

801

  • generating capacity

80

-85%

2000

2013

  • retained interest – intention to remain majority shareholder

Majority Shareholder Fully Aligned with Investors

renewables are one of the fastest growing power sources
Renewables are One of the Fastest Growing Power Sources

Growth in Renewable Power Generation (TWhs)

Growth Drivers

72% increase in renewables

39% increase in renewables

2010

2035

2010

2035

Canada

U.S.

Sources: Annual Energy Outlook 2013 – EIA and Canada's Energy Future: Energy Supply and Demand Projections to 2035 - NEB, November 2011.

Positioned to Capitalize on Significant Growth

potential acquisitions from transalta
Potential Acquisitions from TransAlta

813 MW of Hydro Assets

99 MW of Contracted Wind Assets

164 MW of Geothermal Assets

15

slide16

Growth Criteria

  • Assets with proven operating history
  • Long-term PPA contracts
  • Investment-grade counterparties
  • Familiar technologies/suppliers

New Richmond, 68 MW

Consistent Risk Profile with Existing Portfolio

16

proven management team
Proven Management Team

Extensive Industry and Growth Experience

board of directors
Board of Directors

* Independent

Strong and Experienced Independent Directors

slide19

Financials

St. Mary, 2 MW

19

cash available for distribution millions
Cash Available for Distribution ($ millions)

69%

83%

$86M in estimated Annual dividends

EstimatedAdjusted EBITDA LTM ending March 31, 2013

Deduct:

Interest Expense

Deduct:

Maintenance Capital Expenditure

Deduct:Cash Taxes

Estimated Cash Flow Available for Distribution Prior to Debt Principal Payments

Deduct:

Debt Principal Payments

Estimated Cash Flow Available for Distribution After Debt Principal Payments

Prudent Payout Ratio of 83% After Debt Principal Payments

financial strength
Financial Strength

Wolfe Island, 198 MW

Debt to EBITDA of 3.5X

Conservative payout ratio

Reimbursement based G&A Model

Access to capital markets

Flexibility and Discipline

21

investment highlights
Investment Highlights
  • Scale and diversification underpinned by high quality assets
  • Low-risk portfolio consisting entirely of operating assets with fully contracted investment-grade counterparties
  • Multi-faceted growth strategy with potential access to >1,000 MW pipeline
  • Conservative payout ratio and financial leverage
  • Long-term alignment with TransAlta as sponsor and majority shareholder
  • Predictable, Stable Cash Flow Supports Attractive Dividend Yield

Castle River, 44 MW

22